Hosted vs On-Premises
There are many factors in choosing whether you want to have an external host for your PBX or bring it in-house. Which choice is right for you?
There are many serious considerations for any organisation moving away from its existing phone system, likely to be based on the regular phone network and an expensive Centrex system to a new system based around IP telephony. A key decision is the right PBX system to choose and how to integrate that into existing organisation IT and business practices while still planning for the future.
For some organisations, key functionality and features are going to drive the decision and these will in turn drive many of the other potential decisions. But in a majority of cases the features and functionality on offer will exceed current planning and practices so dramatically that other more basic operational issues will come to the fore.
The most critical of these from the point of view of implementation and future growth is whether to have a PBX system physically on your organisation's premises and under your control or whether to have a PBX hosted externally by a service provider. For a few organisations this decision will stem from a fundamental philosophy of the business - outsourcing all functions that are not directly germane to the core business.
However, IP telephony and VoIP are new technologies with great potential and their benefits and future directions are not clearly understood yet by those in the field, let alone their customers. The factors that come into play are cost, future expansion, control, flexibility, range of features and options, and implementation.
We'll take a look at the pros and cons of hosted versus on-premise solutions in each case:
Cost
In the long run this is more of a wash than you might expect. It is obvious from the outset that the initial and setup costs for a hosted solution will be lower than for an on-premises solution. But it isn't necessarily so clear where long term operating costs end up taking the overall cost equation. The variables that come into play include the lifetime of equipment, how rapidly technological change will outdate existing equipment and the ease-of-use and flexibility of the solution in question.
Hosted IP-PBX
Pros: Lower setup cost, no maintenance costs
Cons: Potentially higher ongoing service provider costs
On-premise IP-PBX
Pros: Potentially lower ongoing costs, no risk of fee increases
Cons: Higher setup costs, unknown long-term maintenance costs
Future Expansion
The potential for future expansion is more a matter of control and timeframe than of locking yourself into some kind of limitation. Both on-premise and hosted IP-PBX solutions leave you room for expansion and growth. Both will incur higher costs along with growth at a rate that should reduce your overall per-seat cost but will still mean a higher total bill. Both have the potential for allowing big jumps in future expansion. The difference is that with a hosted provider you eliminate some of the risk and difficulty but at the cost of a potentially longer turn-around time and possibly losing some flexibility.
Hosted IP-PBX
Pros: Your provider shoulders all the risk, work and complexity
Cons: Your provider may not be able to make changes as quickly as you could yourself and may not be able to precisely match your needs.
On-premise IP-PBX
Pros: You have complete control and flexibility - you can even switch solutions or mix-and-match.
Cons: Every expansion increases the complexity you have to manage yourself. Control
Control is a tricky issue and really what is at the heart of a decision between a hosted or on-premise solution in terms of strategy. Some organisations prefer to keep control as much as possible internally, even at the cost of added cost, work and complexity. Other organisations want to outsource as much as possible to keep internal focus on core business - even if that decision ends up costing them more. While this decision would seem to be a clear win for an on-premise solution, in fact several hosted providers do supply enough flexibility in terms of services that many organisations would be satisfied that they had enough control.
Hosted IP-PBX
Pros: Paradoxically, by giving up control you may be able to see the forest better rather than the trees.
Cons: Let's face reality - your service provider has the actual control - you don't.
On-premise IP-PBX
Pros: You really do have control over every detail. An easy-to-use solution with careful management will give you a solution that matches your needs better than anything else can.
Cons: You have control - now you have to exercise it...
Flexibility
While there are differences for an organisation between a hosted and on-premise solution in this regard, they are more to do with timing. Any reputable hosted solution will be prepared to work with you to add the features you need and require and will also be prepared to become more flexible as market needs arise. But there is disadvantage for someone using the hosted solution. It will always be a common solution for all the provider's customers and it will take the service provider longer to implement it than you could do yourself with an on-premise solution.
Hosted IP-PBX
Pros: Service provider may have more resources to implement a solution you could not afford to do just for yourself.
Cons: Slowness to adapt and reluctance to adapt for a single customer.
On-premise IP-PBX
Pros: You can do what you want with your equipment - the ultimate flexibility.
